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Technological Progress, Terms of Trade, and Monopolistic Competition

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  • Chul Chung

Abstract

This paper examines welfare implications of technological progress in the new trade model with monopolistic competition. Our result shows that labor-augmenting technological progress turns the terms of trade against the growing country while capital-augmenting technological progress shifts them in favor of the growing country. Unlike the Findlay-Grubert theorem, both technological progresses are welfare-enhancing. The key channel for this welfare effect is the love of variety in the new trade model.

Suggested Citation

  • Chul Chung, 2007. "Technological Progress, Terms of Trade, and Monopolistic Competition," International Economic Journal, Taylor & Francis Journals, vol. 21(1), pages 61-70.
  • Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:61-70
    DOI: 10.1080/10168730601180887
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    Cited by:

    1. Kwok Tong Soo, 2016. "Intra-industry trade: A Krugman–Ricardo Model and Data," Economica, London School of Economics and Political Science, vol. 83(330), pages 338-355, April.
    2. Bernhard G. Gunter & Valeria Vargas Sejas, 2017. "Free Falling Terms of Trade Despite Industrialization: The Case of Bangladesh," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 33, Bangladesh Development Research Center (BDRC).
    3. Kwok Tong Soo, 2013. "Intra-industry trade," Working Papers 33867578, Lancaster University Management School, Economics Department.

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